Ingles Accounting Subject of SEC Inquiry

ASHEVILLE, N.C. – Ingles Markets, Inc. here said yesterday it is the subject of an informal inquiry by the Securities and Exchange Commission regarding the accounting for a vendor contract it entered into in 2002.

The regional chain said the SEC has requested certain documentation regarding the vendor contract in question, as well as other large vendor contracts entered into from 2002 through 2004, and related accounting documents.

Ingles said it has begun an internal review of the related accounting issues, and that based on information related to fiscal years 2001 through 2004 has determined that certain payments to vendors were recorded in the wrong periods or incorrectly. The company said some financial periods may need to be restated to move recognition of some payments, but "management does not believe that the restatements will have any impact on cash flow and does not currently expect the restatements will have a negative effect on Ingles' results for fiscal 2004."

As a result of the internal review, the company has delayed past the Dec. 9 deadline the filing of its earnings report for the fourth quarter and full fiscal year 2004. However, Ingles reported yesterday that its same-store sales for the fourth quarter ended Sept. 25 rose 8.2 percent. Total sales also increased 8.2 percent to $544.1 million.

Ingles Markets, based in Asheville, N.C., operates 197 supermarkets in six Southeastern states. In conjunction with its supermarket operations, the company also operates 74 neighborhood shopping centers, all but 17 of which contain an Ingles supermarket.
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